Tax-Free Savings Account (TFSA)

Investment income, including interest, dividends, and capital gains, earned within a TFSA is not taxed, even upon withdrawal allowing for Compound Growth.

Funds can be withdrawn at any time for any purpose without incurring taxes. Withdrawn amounts are added back to your contribution room in the following year.  

Your TFSA contribution room accumulates each year if you are 18 or older and have a valid Social Insurance Number (SIN). Unused contribution room carries forward indefinitely.  

Similar to Registered Retirement Savings Plans (RRSPs), TFSAs can hold various investments, including cash, mutual funds, securities listed on designated stock exchanges, guaranteed investment certificates (GICs), bonds, and certain shares of small business corporations.

The annual TFSA contribution limits have varied since the program’s inception in 2009. As of 2025, the cumulative contribution room for someone who has been eligible since 2009 is $102,000. 

Over-contributing to your TFSA can result in a penalty tax of 1% per month on the excess amount until it is withdrawn or sufficient contribution room becomes available.